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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

8 September 2011

Interview with Fran Kelly

ABC Radio National

8 September 2011

SUBJECTS: Member for Dobell; asylum seekers; National Accounts; economic reform.

KELLY:

Wayne Swan, welcome to Breakfast.

TREASURER:

Good to be here Fran.

KELLY:

New South Wales Police this morning have said they will not be investigating Craig Thomson.  No basis for any formal investigation in to any criminal offence.  Have you spoken with Craig Thomson?  What's his response?

TREASURER:

No I haven't but it's a pretty categorical statement.  I think what it does is it exposes Mr Abbott's tactics, his tactics to wreck everything, to talk everything down and to throw as much mud as possible regardless of the facts and I notice Mr Brandis is still out there throwing mud again this morning.  But this is quite a categorical statement.

KELLY:

Well, George Brandis said this morning, you know, a broader issue here is the use by Craig Thomson and others of union members' money as their own.  Now there is no criminal investigation to be sure, but are there unanswered questions for you?

TREASURER:

Will if there are questions that people want to ask let's see them asked and let's have the process go through formally without all of this mud slinging that we're getting from the Liberal Party.  Look, there is a whole tactic here from Mr Abbott and the Liberals - it's to wreck everything, it's to talk the economy down and it's to go out there and throw mud at individuals.  Now this is a pretty clear statement from the New South Wales Police, no evidence to warrant a formal investigation by the New South Wales Police.  Isn't it about time we got something constructive from the Liberal Party like an alternative policy particularly when it comes to the economy?

KELLY:

But with no formal or criminal investigation you're free to talk now.  I wonder if you think it was appropriate for the New South Wales ALP to spend $90,000 of members' money to drop a defamation case?

TREASURER:

Well that's a decision for the New South Wales ALP, and I note that the Liberal Party has done the same on a number of occasions.  Look, there's only one person in the Parliament that's facing criminal charges at the moment and that's the member of Mr Abbott's Liberal Party.  We're not out there talking about that case.  It should go through in the appropriate way.  We're not out there throwing mud like the Liberal Party are out there throwing mud. But there's a pattern of behaviour here.  It doesn't matter whether it's Craig Thomson or whether it's the economy or whether it is asylum seekers, regardless of the facts they are out there running these scare campaigns and throwing mud all the time.  I think the country deserves better from the alternative government.

KELLY:

So is the Craig Thomson matter over now as far as Labor is concerned?

TREASURER:

Well, all we can do is to see the results of these investigations but this is a categorical statement from the New South Wales Police.  If people have got allegations to make they should be dealt with in the normal way free from the lynch mob mentality which the Liberal Party is pursuing. 

KELLY:

Just before we come to the economy another categorical statement, this time from Immigration Department officials briefing Tony Abbott yesterday on the High Court decision.  They say that if Australia abandons offshore processing 600 people a month will head to Australia by boat.  Large numbers of people would overwhelm our detention centres and be thrown into the community creating tensions, social tensions akin to the sort we've seen in London and Paris in recent times.

TREASURER:

Well, Fran it has been very clear for some period of time that we need regional processing or offshore processing in a regional framework.  That is the most effective deterrent.  That is very clear.  That is the advice the government has received.  That is the advice which is behind the Government's decision to pursue a regional framework with Malaysia.

KELLY:

But do you believe that asylum seekers coming here will create social division and disharmony if we go onshore processing?

TREASURER:

I've seen these statements in the papers this morning.  The most important thing to do is to get the best public policy process in place and the best public policy in these circumstances is offshore processing within a regional framework.  That's why the Government has pursued the Malaysian solution.  Now of course the High Court  -

KELLY:

My point is -

TREASURER:

has thrown a spanner in those works Fran.

KELLY:

Yes, sure but you are Acting Prime Minister, these comments come from Immigration Officials.  It is pretty alarmist, suggestions of Paris and London riots.  Is that what Australians (inaudible) about asylum seekers?

TREASURER:

Well, Immigration Officials have said to the Government that the most effective deterrent is offshore processing in a regional framework.  In terms of the individual numbers people can make what they want of those.  The fact is that if you want to deter people from getting on to boats, if you want to break the people smugglers' model, then you need offshore processing in a regional framework.  We've pursued that with good faith.  We believe that is the best policy path for the future of the country and there is no doubt that we have to pursue that because that is the most effective deterrent. 

What we don't want to see is what we saw at the end of last year where that boat slammed into Christmas Island.  We saw those terrible circumstances, we saw people drowning, we do not want those set of circumstances to repeat themselves and that's why we need an effective deterrent for the people smugglers.

KELLY:

And that's been the Government's argument, but that is not about saying that asylum seekers coming here will basically rip the fabric of our society -

TREASURER:

Well, I'm not sure that that statement has been reported correctly, so I'm not going to validate that statement, but what we do know is that a regional solution offshore in a country like Malaysia, with the arrangements we put in place, working with the UN, is the most effective deterrent and that's how we save lives and put some integrity into this process.

KELLY:

Treasurer, to the economy now.  The big surprise in the National Accounts yesterday was that unexpected rebounding in consumer spending in the June quarter.  Contrary to all the retail surveys and consumer confidence surveys, Australians are spending at reasonable levels.  So is the cautious consumer that retailers talk about, is that a myth?

TREASURER:

Well, no the answer is we have both.  We do have a cautious consumer but what you also see in the figures is that we have not only strong investment, we have rising incomes.  It is the case that Australians have been saving more and spending less and it is not something that just arrived in the past year, it's been there since the end of 2008 -

KELLY:

But we're not spending less, we're spending.  We're spending -

TREASURER:

No, well our incomes are rising, Fran.  So we're saving a bit more but we're still spending or consuming at trend.  So the figures showed yesterday that consumption was at about 3 per cent for the year, and that's trend.  What we're also seeing is a change in the way people consume and people are consuming more services and they're buying less goods.

KELLY:

What does that mean when you say more services?  What are we spending our money on?

TREASURER:

Well, educational services, recreational services, people are spending more in that area.  They're not necessarily spending as much as they have been spending in the shops.  So there is a change in consumer behaviour.  People may be spending more on entertainment and less by going into, you know, one of the department stores.  So we're also seeing a change of behaviour in the middle of that.  So we have rising incomes.  The savings rate is up.  People are not spending now like they spent at the height of Mining Boom Mark I.  They're saving a bit more, but they haven't totally taken their hands out of their pockets.  The fact is that they are still spending around trend, but we are having sectors of our economy - which is why we say we have a patchwork economy - that are impacted not just by a cautious consumer, but also by the high level of the dollar.

KELLY:

If the household sector is in such good shape (inaudible)?

TREASURER:

Well, low unemployment as well, Fran.  People have jobs and people have rising incomes and the household sector is in good shape.

KELLY:

Well, so why are confidence levels so low?  Should the Government shoulder part of the blame for failing to convince Australians of the strength of the economy?

TREASURER:

Well, the fact is that Australians are acutely aware of what is going on overseas.  They've been acutely aware of that since this time in 2008 when Lehmann Brothers collapsed.  People have been much more cautious and there is an ongoing impact of that Global Financial Crisis and global recession.  The fact is that the share market for example, is not back to the levels it reached prior to the Global Financial Crisis.  There's been an income effect and a wealth effect and that stays with us and has been with us for some time, that impact on confidence. 
What also impacts on confidence has been the global turbulence we've seen now running for 18 months and on top of that you've had this very determined effort by Mr Abbott and the Liberals to talk down our economy, to misrepresent the basic facts of the Budget, of the surplus, of levels of debt and so on - and that has had an impact as well.  But Australians can see in these figures that some of the dire predictions of the doomsayers and Mr Abbott are just plain wrong.

KELLY:

Well, global turbulence is one thing, what about the domestic political turbulence?  Labor's support has collapsed in the polls, there's constant talk of a Government in crisis.  Do you think for Australians that's fuelling a confidence crisis, it's not about the economy?

TREASURER:

Well, I think some of the reporting of that is certainly contributing.  For example, the coverage of these National Accounts yesterday and today.  When the National Accounts came out in March - and of course there was a detraction due to the floods - that was the first item on the news back in March, and in fact one commentator went out and said this meant Australia was going into recession.  Last night when it came to the electronic coverage there was barely coverage of it on the commercial stations.  So this is good news for Australia, it is news that Australians need to see.  They can analyse it however they like, they can reach whatever conclusions they like but this was pretty good news. But it didn't get the same coverage as the National Accounts in March.  So I think there is a challenge for us to go out and say to Australians 'the glass is more than half full,  It's most certainly not half empty'.  That's a challenge for the Government but I think it's a challenge for all of us.

KELLY:

It is a hard glass to get a handle on isn't it though because on the one hand we have these positive growth figures, on the other hand we've seen a sweep of job losses in recent weeks.  Job losses, more today and more predicted in the future. 

TREASURER:

Look these are complex times, Fran.  We have a patchwork economy.  We have a high dollar.  We've got turbulence in global financial markets.  There's a whole lot of cross currents going on in our economy. But what I said yesterday is we should use these figures to understand that the building blocks, the fundamentals of the Australian economy, are in better nick than just about any other developed economy in the world and we ought to have a much more balanced discussion about that and most certainly in terms of the political debate.  What we don't need is Mr Abbott and the Liberals going out there continuously misrepresenting these facts.  It's not just Mr Abbott and the Liberals, it is the shock jocks and a whole lot of other people that take any figure that comes through and always analyse it on the down side.  That's not helpful either.  The glass is more than half full, it is not half empty.

KELLY:

The GDP numbers, the National Accounts, are backward looking.  Looking forward, some economists see headwinds ahead.  The impact of the flood rebuilding in Queensland will start to fade, that will bring that growth figure down.  Global economic conditions are looking bad and set to worsen.  Are you still as determined as ever to return the Budget to surplus?

TREASURER:

Well, I am determined to do that, and let's just analyse where we are.  If you look at growth in the past year on year average numbers it's 1.8 per cent.  We were looking at 2.25 [per cent] in the Budget so growth is basically about half a percent less than what we thought at the time of the Budget.  So we still do have a challenge on our hands in bringing that Budget back to surplus in 2012-13 but we are determined to do it.  But we should acknowledge and have a responsible, measured conversation about the challenges of doing that because we don't know what's going to evolve in the global economy.  There's a long and painful adjustment going on in Europe and in the United States, that will have some impact on global growth, it will have some impact on growth here, and it will have an impact on our Budget.

KELLY:

Treasurer yesterday on breakfast New South Wales Treasurer Mike Baird was speaking with us and he said the O'Farrell Government would  be prepared to drop the royalty rise it announced in its Budget the other day, $950 million, which basically becomes a hit to your Budget because you'll have to pick up the tab if it's fully compensated for the hit on New South Wales as a result of the carbon tax.  Will you sit down with him and have that conversation?

TREASURER:

This is just a gigantic distraction from the fact that they're running a Budget deficit, a gigantic distraction from the fact that they're jacking up electricity prices, sacking public servants and so on.  They're not interested in having a sensible discussion.

KELLY:

Well, they will be out of pocket because of the carbon tax.  They say you won't sit down and discuss this with them?

TREASURER:

Well, they say that, they go out and put all of these numbers into the public arena.  The fact is that the revenues from the MRRT are really important to responding to the challenges of the patchwork economy that we were talking about before and that is really important in New South Wales.

KELLY:

So no trade off?  No compensation?

TREASURER:

Well, this is a half baked solution and/or idea put together in the Budget with a government that is in panic basically, and they've got no way of actually explaining what they intend to do or how they intend to do it and I've not seen any full explanation of what they're intending to do or how they're intending to do it.

KELLY:

Just finally Treasurer, just a couple of days ago former BHP Billiton Chair and top banking executive Don Argus attacked Labor's – what he called –lazy reform agenda.  He said: 'I'm concerned future generations of Australians will look back with regret that our leaders opted for the most politically expedient outcomes.'  Lazy reform?

TREASURER:

I just completely repudiate that.  We're taking on the very big reforms and the really hard reforms.  Pricing carbon is a really hard reform but it's an important long-term reform to set this country up for the 21st century.  Putting in place the very big reforms that we've got in terms of skills, education and training which were widely supported by business across the board during the Budget is a very big reform.

KELLY:

Did you ring Don Argus and tell him?

TREASURER:

Well, I do talk to Don Argus from time to time and I probably will be having a conversation with him in the near future and I will be pointing these things out because these measures that we have put in place have been widely supported by business when it comes to skills and training.  Yes, there's been a debate about carbon pricing, but nobody could say that we were taking the lazy option when it came to carbon pricing or the easy political option when it came to carbon pricing.  We're doing the right thing by the country and that's what's important to us and to the country.

KELLY:

Wayne Swan, thank you very much for joining us.

TREASURER:

Thank you.